Thursday 24th November 2011
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The High Court in Wellington has dismissed an appeal against the regulatory approval for an acquisition that would give Cavalier Wool Holdings the ability to build a wool scouring monopoly in New Zealand.
Judge Jillian Mallon and lay member Kerrin Vautier turned down carpet maker Godfrey Hirst’s appeal against a Commerce Commission decision that would let CWH buy rival NZ Wool Services International and become the nation’s only scourer, Cavalier Corp said today. The full decision is with counsel, and will be published once confidential information has been deleted.
The determination paves the way for CWH, which is half-owned by carpet maker Cavalier and 25 percent apiece by Accident Compensation Corp and private equity investor Direct Capital Investments, to buy WSI for some $40 million, from which it would carve out the scouring assets.
CWH’s bid to create a monopoly was approved by the antitrust regulator in June, in spite of opposition from rival Godfrey Hirst, WSI’s own directors and Wool Equities. CWH successfully argued that the local industry’s biggest threat was competition from Chinese scourers.
In September, Wool Equities emerged as a rival bidder for WSI, and will ask its shareholders to approve a $40 million capital raising that would let it make an offer to merge the companies.
WSI’s assets are up for grabs because its two biggest shareholders, Plum Duff and Woolpak Holdings, with a combined 64 percent holding, are in receivership. Both companies have ties to the deceased Timaru businessman Allan Hubbard and failed last December.
Last week, WSI said it planned to raise fresh capital once the High Court ruled had ruled on Godfrey Hirst’s appeal. It has stridently opposed Cavalier’s bid, calling the carpet maker’s claim that such a monopoly would be the saviour of the New Zealand strong wool industry “both mischievous and misleading.”
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